The “One Big Beautiful Bill” is a comprehensive budget bill that includes significant changes to taxes, healthcare, border security, and economic growth. Senate Republicans are racing to pass the bill ahead of a self-imposed July 4 deadline to send it to President Donald Trump’s desk for signing into law.
Social Security Taxes
The bill proposes extending Social Security tax breaks, with the Senate version suggesting a $6,000 tax deduction for older Americans. This move aligns with Trump’s campaign promise to eliminate taxes on Social Security income. The House bill temporarily increased the standard deduction of up to $4,000 for individuals 65 and over, set to expire in 2028.
Medicaid Requirements
The bill introduces additional restrictions and requirements for Medicaid, including new work requirements for childless adults without disabilities. They would need to work at least 80 hours per month from December 2026 to qualify. The Senate proposal puts even more restrictions on Medicaid, potentially causing more headaches for Republicans when the bill returns to the House. The bill also proposes lowering provider taxes from 6% to 3.5% by 2031, but complaints from some Republicans led to the addition of a $25 billion rural hospital fund.
Increased Cap on SALT Tax
The bill increases the deduction limit for state and local taxes (SALT) to $40,000 for married couples with incomes up to $500,000. Senate Republicans are matching the House provision but only until 2030. This move is crucial for a few Republican holdouts in Democratic-controlled urban areas.
SNAP Benefits
The bill requires states to contribute more to the Supplemental Nutrition Assistance Program (SNAP) and adds work requirements for able-bodied enrollees without dependents. This reform aims to tighten eligibility and reduce coverage for some beneficiaries.
No Tax on Overtime or Tips
The House bill eliminates taxes on tips and overtime pay, aligning with Trump’s campaign promises. The Senate version includes a similar provision but phases out the benefits based on annual income, starting at $150,000 for individuals and $300,000 for joint filers.
Clean Energy Tax Cuts
Both the House and Senate versions propose ending Biden-era clean energy tax credits, but the Senate suggests phasing them out more slowly. The Senate extended the runway for businesses building wind and solar farms to benefit from tax credits, denying credits to companies with supply chain ties to “foreign entities of concern” like China.
Next Steps
The Senate must agree on a final version of the bill before sending it to the floor for a vote. Given the changes to the original House bill, it will return to the House for another vote, likely facing more challenges. Trump has urged the Senate to pass the bill, saying, “It’s time for our friends in the United States Senate to get to work, and send this Bill to my desk AS SOON AS POSSIBLE!”
Reaction from Democrats
Democrats have criticized the bill, particularly the changes to Medicaid and food stamps. House Minority Leader Hakeem Jeffries called it a “reckless, regressive and reprehensible GOP tax scam” and pledged to use the bill against Republicans in next year’s midterm elections.